In our latest Winter Fuels Outlookwe estimate that US households that use natural gas primarily for space heating will spend an average of $931 on heating this winter (October-March), which is 28% (or $206) more than last year.
Natural gas is the primary heating fuel in 47% of US households, according to the US Census Bureau’s 2021. American Community Survey. The selling price of natural gas and the amount of natural gas used determine how much households spend on winter natural gas bills.
Data source: US Energy Information Administration, A short time to check the power (STEO), Winter Fuels Outlook
This winter, higher natural gas prices are the main driver of the expected increase in natural gas bills. On average, we expect retail natural gas prices to increase 22%, from $13.02 thousand (Mcf) last winter to $15.95 Mcf this winter. We expect that the prices of natural gas sales in the Midwest will increase significantly nationally, by 27% compared to last winter, to 13.80 $ / Mcf.
The increase in retail prices reflects the increase in natural gas prices over the past year. We estimate the spot price of natural gas at the US benchmark Henry Hub will rise by 54% from last winter to an average of 7.26 million British thermal units. Changes in natural gas prices are often reflected in the market price over a period of months due to the way these costs are factored into regulated rates.
Spot price spikes in previous years can affect current retail prices. For example, local natural gas prices reached record highs following Winter Storm Uri in February 2021, particularly in the Midwest. Following that price increase, prices quickly returned to pre-winter-storm levels. Several utility companies in states affected by the storm have filed petitions with state commissions outlining plans to recover from the skyrocketing natural gas costs they incurred after the winter storm. For example, in Colorado, these plans add a line item fee to utility bills over the next several years to spread the cost over time.
This winter, we expect colder temperatures and more domestic consumption to contribute to higher natural gas bills compared to last winter. For households using natural gas as their primary space heating fuel, we expect average consumption this winter to increase 5%, or 58.4 Mcf, from last winter.
Main contributor: Corrina Ricker